Legislature(2003 - 2004)

04/29/2004 09:05 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
     SENATE BILL NO. 313                                                                                                        
     "An Act making supplemental and other appropriations; amending                                                             
     appropriations; making an appropriation to capitalize a fund;                                                              
     and providing for an effective date."                                                                                      
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Green reminded  the  Committee  that during  the  previous                                                            
hearing on  this bill, the discussion  focused on the Department  of                                                            
Natural Resources'  and the Department  of Revenue's involvement  in                                                            
the endeavor to further a natural gas pipeline.                                                                                 
Amendment #5:  This amendment inserts a new subsection  into Section                                                            
14. DEPARTMENT  OF NATURAL RESOURCES,  page 20, line 11 as  follows.                                                            
          ( ) The sum of $1,580,000 is appropriated from the                                                                    
     general  fund to the Department  of Natural Resources  for risk                                                            
     analysis  related  to the state  gas pipeline  and to  bringing                                                            
     North Slope natural gas to market.                                                                                         
          ( ) The sum of $3,900,000 is appropriated from the                                                                    
     general  fund  to  the  Department  of  Natural  Resources  for                                                            
     permitting and application  processing related to the state gas                                                            
     pipeline  right-of-way  work related  to bringing  North  Slope                                                            
     natural gas to market.                                                                                                     
In addition  a new  subsection is  added to Sec.  16. DEPARTMENT  OF                                                            
REVENUE, page 21, line 11 as follows.                                                                                           
          ( ) The sum of $3,400,000 is appropriated to the                                                                      
     Department of Revenue  for work related to bringing North Slope                                                            
     natural gas to market from the following sources:                                                                          
                General fund              $2,400,000                                                                            
                Statutory designated                                                                                            
                     Program receipts      1,000,000                                                                            
          ( ) The sum of $1,700,000 is appropriated to the                                                                      
     Department of Revenue  for work related to bringing North Slope                                                            
     natural gas to market from the following sources:                                                                          
                General fund              $1,200,000                                                                            
                Statutory designated                                                                                            
                     Program receipts        500,000                                                                            
For further  clarification,  the following  language is included  in                                                            
the amendment.                                                                                                                  
     All  the subsections  added by this  amendment are for  capital                                                            
     projects and lapse under AS 37.25.020.                                                                                     
     The second subsection  for the Department of Natural Resources,                                                            
     totaling $3,900,000, is effective July 1, 2004.                                                                            
     The second subsection  for the Department of Natural Resources,                                                            
     totaling $1,700,000, is effective July 1, 2004.                                                                            
Co-Chair Green moved to adopt Amendment #5.                                                                                     
Co-Chair Wilken objected for explanation.                                                                                       
Co-Chair  Green  explained   that  these  funds  would  support  the                                                            
Departments' involvement  in the gas line endeavor.  Adoption of the                                                            
amendment would  oblige Governor Frank Murkowski's  request "to move                                                            
forward" in furthering the gas pipeline project.                                                                                
Co-Chair Wilken removed his objection.                                                                                          
There being no further objection, Amendment #5 was ADOPTED.                                                                     
Co-Chair  Wilken  asked  that the  Legislative  Legal  and  Research                                                            
Services Division be allowed  to make technical changes to SB 313 as                                                            
deemed necessary.                                                                                                               
There being no objection, the request was approved.                                                                             
Co-Chair Green  explained that, to date, $13 million  of a total $15                                                            
million  General Fund (GF)  supplemental budget  allowance  that was                                                            
included in the FY 2004  budget, has been allocated. In prior years,                                                            
the  supplemental appropriation  request  has  been as  much as  $71                                                            
million.  Tremendous  effort  has been  undertaken  regarding  "what                                                            
truly  needs  to  be  included  and  what  truly  is  important"  in                                                            
determining the supplemental  request amount that should be included                                                            
in  the appropriation   budget. She  voiced  appreciation  to  State                                                            
departments  for the consideration  given to the budgeting  process,                                                            
the amendments  to  the supplemental  budget,  and the supplemental                                                             
requests that have been submitted.                                                                                              
Co-Chair  Green reviewed the  projects that  have been added  to the                                                            
bill thought the adoptions of Amendments #1 through #5.                                                                         
Senator  Bunde commented  that,  even though  he did  not object  to                                                            
Amendment   #5,  he  has  concerns   regarding  the  $10.5   million                                                            
expenditure.  He acknowledged  that the excitement  of developing  a                                                            
gas pipeline is a factor  in the allowance of this request. However,                                                            
he declared that were other  departments to submit "generalities" as                                                            
the Department  of Natural Resources has, the Committee  "would have                                                            
been  very critical"  and  would have  demanded more  detail.  While                                                            
other Departments  "have been  asked to be  lean and mean and  to do                                                            
more with  less,"  the Committee  has been incredibly  flexible  and                                                            
generous due to the nature  of the request. In conclusion, he voiced                                                            
the "hope that our hopes are not misguided."                                                                                    
Co-Chair  Green,   noting  that  Senator   Bunde  had  chaired   the                                                            
Department of Natural Resources  budget subcommittee, commented that                                                            
the  overall Department  budget  is  "lean and  mean."  It could  be                                                            
argued  that the  State could  never do  enough in  its endeavor  to                                                            
develop its natural resources;  and in that regard, the Department's                                                            
budget has  been "on the shy side"  in recent years. The  Department                                                            
has stressed that  it would attempt to generate revenue,  would seek                                                            
matching  funds,  and would  use  these  funds  in the  best  manner                                                            
possible.  She  wished the  Department  success  in its  efforts  to                                                            
further the gas pipeline project.                                                                                               
Senator Bunde  agreed that the rest  of Department's budget  is lean                                                            
and mean; however,  he argued that the addition of  the gas pipeline                                                            
project  funding would  "dissipate"  that leanness.  He quoted  that                                                            
"bureaucracies'  first goal is to  maintain and expand itself."  The                                                            
Department would find a  manner through which to expend every dollar                                                            
that is provided to them.                                                                                                       
Co-Chair  Wilken expressed  confidence  that the  funds provided  to                                                            
support the  gas pipeline endeavor  would be fruitful; particularly                                                             
as he  respects the ability  of Steve Porter,  Deputy Commissioner,                                                             
Department of  Revenue, to utilize his private sector  experience to                                                            
further this endeavor.                                                                                                          
Senator  Olson   voiced  that  it  might  be  unrealistic   for  the                                                            
Departments  to expend  in excess  of five million  dollars on  this                                                            
project before the end  of the FY 04 fiscal year in approximately 60                                                            
Co-Chair Green reminded  the Committee of the Departments' testimony                                                            
regarding the  "time-sensitive" nature of the work  relating to this                                                            
Senator  Olson voiced  surprise  that  the Departments  could  spend                                                            
approximately three million dollars a month in this endeavor.                                                                   
Senator  Dyson   shared  Co-Chair   Wilken's  confidence   that  the                                                            
Departments' project  management team would be very  "responsible in                                                            
their stewardship"  of this  endeavor. He  compared the endeavor  of                                                            
negotiating with the oil  industry on this project to being a player                                                            
"in  the  world's  biggest  poker  game,"  in  that  it  requires  a                                                            
tremendous amount  of funds to play and that the rewards,  while not                                                            
guaranteed,  "are worth the risk."  He expressed that the  State has                                                            
reached a "critical  juncture, and  that opportunities such  as this                                                            
are rare and should not be missed.                                                                                              
Senator Hoffman pointed  out that the backup material specifies that                                                            
several of the  natural gas pipeline projects must  be funded beyond                                                            
the end of the FY 04 fiscal year.                                                                                               
Co-Chair Green  pointed out that the  explanatory comments  attached                                                            
to Amendment  #5  specify that  $1.7 million  of  the Department  of                                                            
Revenue  and $3.9  million of the  Department  of Natural  Resources                                                            
total requests would become available on July 1, 2004.                                                                          
Senator   Hoffman  observed   that  similar   differential   funding                                                            
explanatory language is  included in Amendment #4 for the Department                                                            
of Law.                                                                                                                         
Co-Chair Green concurred                                                                                                        
Senator Dyson  reminded that the Senate  Resources Committee  has on                                                            
contract, an internationally  renowned resource professional who has                                                            
independently  endorsed the Legislature's actions  in this endeavor.                                                            
Senator Hoffman  asked the  total amount  of general funds,  federal                                                            
funds, and  other funds, including  funds provided by Amendments  #1                                                            
through #5 that would be appropriated in this supplemental bill.                                                                
Co-Chair Green stated that this information would be provided.                                                                  
AT EASE: 9:20 AM / 9:21 AM                                                                                                      
Co-Chair Wilken  moved to report SB 313, as amended,  from Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
[NOTE: Due  to technical  difficulties, the  following exchange  was                                                            
not recorded.]                                                                                                                  
Senator Hoffman  commented that this  bill is an appropriation  bill                                                            
and as such has no accompanying fiscal note.                                                                                    
Co-Chair Wilken acknowledged, and corrected his motion.                                                                         
AT EASE 9:21 AM / 9:22 AM                                                                                                       
[NOTE: Recording resumes.]                                                                                                      
Co-Chair  Green  commented,  for the  record,  that there  has  been                                                            
concern  regarding payments  for current  and forthcoming  long-term                                                            
health  care.  The  Department  of Health  and  Social  Services  is                                                            
attempting  to rectify the  situation in a  manner that would  incur                                                            
the  least  negative  impact  on  individuals.  This  bill  contains                                                            
authorization language  that is required in order to release federal                                                            
funds that are available.  This concern is the result of "a delay in                                                            
the  payment"  to certain  vendors  as opposed  to  "a non-payment"                                                             
Senator Hoffman stated  that a recent Anchorage Daily News newspaper                                                            
article  alluded  that  these  funds  were  being  withheld  by  the                                                            
Legislative  minority, as a negotiation  tool. He declared,  for the                                                            
record, that  he has not been involved  in any such tactics  in this                                                            
Co-Chair  Green furthered  declared  that  none of  the Committee's                                                             
members have participated in efforts in this regard.                                                                            
There being no objection  to the motion, CS SB 313(FIN) was REPORTED                                                            
from Committee.                                                                                                                 
[NOTE: Co-Chair Wilken chaired the remainder of the meeting.]                                                                   
Co-Chair  Wilken  informed  the Committee  that  the Constitutional                                                             
Budget  Reserve (CBR)  fund balance  at the beginning  of the  FY 04                                                            
fiscal  year  was   $2.07  billion,  and,  according   to  a  recent                                                            
Legislative  Finance Division  projection, the  balance on  June 30,                                                            
2004 should be  $2.4 billion. The increase is due  to such things as                                                            
a recovering stock market.                                                                                                      

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